The Canadian Labour Force Survey delivered more bad news in August. There is always a sense of caution in extrapolating implications from monthly jobs report to the CAD, but with USD/CAD finding its way back down to 1.30, that level may look attractive for many to fade, economists at TD Securities report.
Canadian employment down for third straight month
“Employment fell by another 39.7K in August, well below expectations for a 15K increase, to build on the loss of 74K jobs over the previous two months. We also saw a sharp rise in the unemployment rate to 5.4%, although stronger wage growth will cloud the broader implications for the Bank of Canada.”
“We doubt this number is the catalyst to instigate CAD weakness, but it may start to kick off the domino effect of bad news. That should keep the shelf life of CAD rallies short-lived.”
“USD/CAD near 1.30 should be solid support and a base to leg into longs.”
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